Panasonic Plans to Eliminate 17,000 Jobs Over Two Years in Reorganization

By Mariko Yasu -
Apr 28, 2011

Panasonic Corp. (6752), the world’s
largest maker of plasma televisions, plans to eliminate almost
17,000 jobs over two years as part of an overhaul to restore
profitability to levels before the global financial crisis.

The workforce will drop at least 4.6 percent to 350,000 by
March 2013 from 366,937 at the end of last month, costing about
160 billion yen ($2 billion) in restructuring fees over two
years, the Osaka-based company said in a statement today.
Panasonic said the reorganization will add 66 billion yen to
earnings during the period and raise the operating margin to at
least 5 percent, a level last reached in March 2008.

President Fumio Ohtsubo announced his second round of job
cuts since the global financial crisis as he seeks to transform
Panasonic into a leader of products such as solar panels and
rechargeable batteries amid mounting competition in TVs.
Panasonic spent more than $6 billion purchasing stakes in Sanyo
Electric Co. and Panasonic Electric Works Co. last year to boost
its energy-related businesses.

“Restructuring is inevitable after the acquisitions,”
said Masahiro Mitsui, a Tokyo-based investment analyst at
Federated Advisory Services Co. “Panasonic needs to boost its
competitiveness even more as the energy-related businesses are
getting more and more crowded with South-Korean and Chinese
makers.”

Reviving Profitability

Ohtsubo had previously eliminated more than 29,000 jobs and
cut 200 billion yen in costs.

The maker of Viera sets will halt making new investments
for both plasma and liquid-crystal display operations to revive
profitability at the TV unit that competes with Sony Corp. (6758) and
South Korea’s Samsung Electronics Co., said Ohtsubo. The company
will seek alliances to purchase more LCD panels.

Shares of Panasonic, the first major TV maker to sell 3-D
sets in the U.S., rose 2.4 percent, the biggest gain in a month,
to close at 998 yen in Tokyo today. The Nikkei newspaper
reported earlier today the company plans to cut 40,000 jobs as
part of a restructuring.

Japan’s biggest maker of home appliances will eliminate
overlapping operations in businesses such as white goods and car
navigation systems, the statement said. The company will also
consolidate marketing and research units and may sell some
operations, it said.

Panasonic may reduce the number of plants by 10 percent or
20 percent from about 350 it has globally, Ohtsubo said. The
company plans to expand outsourcing chip production and may
merge with Panasonic Electric, he said.

Energy Devices

The reorganization will add 6 billion yen to operating
profit this fiscal year and 60 billion yen the following year,
the company said.

Panasonic will seek overseas alliances to expand in
industrial-use solar systems, Ohtsubo said. The purchase of
Sanyo, which makes roof-top solar panels for households, was
part of its plan to expand in energy-related businesses amid
growing competition in the TV market.

Panasonic aims to generate at least 760 billion yen in
sales from energy devices in the year to March 2013, the company
said.

“The market wants Panasonic to have bigger and speedier
changes to compete with global rivals,” said Mitsushige Akino,
Tokyo-based chief fund manager at Ichiyoshi Investment
Management Co. “Japanese manufacturing companies must
restructure their old business models. More strategic approaches
are needed to survive today’s global competition.”